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Senior Managers Regime
The Financial Services Faculty's John Mongelard walks through critical changes affecting NEDs of insurance or other regulated financial services boards which commence in December 2018 and 2019.
Approximately £60bn was spent by the UK taxpayer to recapitalise the UK's banks and billions more were paid by shareholders in fines after the global financial crisis. But if the man on the 'Clapham Omnibus' has suffered years of austerity in the years since then, who was held responsible for such spectacular failure? Well the truth is not many. Of course some traders have gone to prison for fraud and their involvement in LIBOR manipulation but how many board members faced consequences for the banks that failed and how they were run in the period leading up to the crisis? The answer is 'not many' and perhaps less than a handful in the UK.
The new regime places new requirements on banks and individuals. Banks have to develop a 'responsibilities map' so that they know who is responsible for what and when. From this map, each individual will then have a 'Statement of Responsibilities' that is specific to them. He or she will have to demonstrate that they: a) have taken 'reasonable steps' and b) followed the conduct rules (See Box 1). The Senior Managers Regime seeks to shift the responsibility for future failures from the legal entity to individuals.